Prices Have Collapsed For South Florida Condos 30 Years Or Older

A wave of aging condos are flooding the market amid looming year-end regulations that could prompt six-figure special assessments.

Condo listings rose 60% in Miami-Dade, Broward and Palm Beach counties in the third quarter, and 85% of all listings are condos 30 years or older, according to a new study by real estate brokerage ISG World.

Average sale prices for these older condos dropped 21% since 2023, compared to the 9% price increase for condos less than 10 years old.

Only approximately 3% of condo listings in South Florida at the end of the third quarter were in buildings newer than 10 years old.

In just two years, the value of the average condo 30 years and older has fallen more than $100K, from $325K in 2022 to $218K at the end of September, according to ISG. Founder and CEO Craig Studnicky told Bisnow in an interview Friday that he thinks prices of older units will continue to dip but that segment of the market is “pretty close to the bottom.” 

All eyes have been on aging condo buildings since the collapse of the Champlain Towers South building in Surfside in June 2021 that killed 98 people. The incident prompted Florida legislators to hone in on older buildings where maintenance has gone unaddressed. They subsequently passed a set of mandates intended to prevent another tragedy through Senate Bill 4-D, which went into effect in 2022 and has created seismic shifts in the condo market.

“The decline in value has everything to do with these milestone laws,” Studnicky said.

Starting Dec. 31, Florida lawmakers made it so condo associations can no longer waive reserves. They required condo associations to conduct structural integrity inspections by a licensed architect or engineer to evaluate walls, primary structures and systems.

The condos then must fund reserves to cover the cost of any needed structural repairs, which could lead to special assessments on unit owners that can cost upwards of $175K, CBS News reported, a fee many owners are struggling to pay.

A significant issue facing these condos is the lack of buyer interest. Between September 2023 and February 2024, more than 72% of existing Miami condos remained unsold and eventually were pulled from the market after an average of 111 days, Bisnow previously reported.

Buyers are avoiding these older buildings due to their concerns about potential high maintenance costs and the need for repairs. Studnicky said media headlines are scaring off apartment shoppers.

“People who are moving to Florida, they’re reading about these special assessments and they’re calling their Realtor to basically say, 'Please don't take me to a building that has this thing called special assessments,'” Studnicky said.

The average price of a condo that has been built within the past 10 years is now just under $2M, with prices up 17% in just the past two years. 

This has led to developers searching for ways to bring more newly built condos to the market, including converting apartment buildings into for-sale condos.

“Some of these multifamily developers that are building multifamily departments are now looking at conversion as perhaps the better business plan,” Studnicky said.

While the moment of truth for older units will come at the end of this year, when the reserve studies must be completed, Studnicky said it could turn out that these required assessments won't be as bad as people expect.

“My instincts are telling me that around 25% of these buildings are going to be OK,” Studnicky said. “I just don’t know which ones.”